Vikram Akula - Micro-Meltdown: The Inside Story of the Rise, Fall, and Resurgence of the Worlds Most Valuable Microlender

Praise for Micro-Meltdown

Vikram Akulas first book, A Fistful of Rice, told the story of how he turned an idealistic vision into a thriving business that helped provide micro-loans to millions of poor women in India. What he couldnt know at the time was that there was a nightmare waiting on the horizon. Hes now seen his dreams come crashing down before his eyes, and hes returned with grace and hard-earned wisdom. The lessons he has to offer are valuable to individuals in all walks of life. This is essential reading for every entrepreneur who wants to change the world for the better.

Vinod Khosla, cofounder of Sun Microsystems and principal at Khosla Ventures

If youre setting out to change the world, you need to be prepared for anything. That includes those disaster scenarios none of us want to imagine. Vikram Akulas eye-opening book provides absolutely necessary insights into what its like to see your dreams come crashing downand how to rebuild afterward.

Van Jones, CNN commentator and founder of Dream Corps

When Vikram Akula started his microfinance company, he had an admirable mission of tackling one of the worlds most pressing problems: poverty. Initially, he had enormous success in blending the best of capitalism and philanthropy, but he also faced a fierce political backlash. Now, returning with an engrossing new memoir after surviving a genuine worst case scenario disaster, he presents a vitally important cautionary tale.

Klaus Schwab, executive chairman of World Economic Forum and founder of Schwab Foundation for Social Entrepreneurship and the Forum of Young Global Leaders

Heres a book that no would-be entrepreneur can afford to skip. Reading Micro-Meltdown will stun you and teach you invaluable lessons about the storms one must weather in innovative business enterprises. An unforgettable true story told by a remarkable visionary, this is essential reading for entrepreneurs, especially for social entrepreneurs.

Cheryl Dorsey, president of Echoing Green

This absorbing book tells the story of how Vikram Akula turned an idealistic vision into a thriving business that today serves millions of poor women in India. Vikram also narrates the dramatic odyssey that his company took to get where it is today.

Farzana Haque, global head for strategic group accounts at Tata Consultancy Services

The events and conversations in this book are based on contemporaneous records and the authors best recollection, yet the author understands that others may perceive events and recall conversations differently. In certain instances, names, persons, organizations, and places have been changed. There is no intent to hurt or defame any person, individual, party, or organization.

Copyright 2018 by AK Publishing LLC

All rights reserved. No part of this book may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles or reviews.

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First E-Book Edition: June 2018

Library of Congress Cataloging-in-Publication Control Number: 2018003821

ISBN 9781946885104

eISBN 9781946885319

Editing by Glenn Yeffeth and Laurel Leigh

Copyediting by Elizabeth Degenhard

Proofreading by James Fraleigh and Cape Cod Compositors, Inc.

Indexing by WordCo Indexing Services, Inc.

Text design by Silver Feather Design

Text composition by PerfecType, Nashville, TN

Cover photo by Omar Adam Khan

Author photo by Ben Bloodwell

Cover design by Faceout Studio, Jeff Miller

Jacket design by Sarah Avinger

Printed by Lake Book Manufacturing

Distributed to the trade by Two Rivers Distribution, an Ingram brand www.tworiversdistribution.com

This book is dedicated to the memory of Sitaram Rao, who brightened the world with his smile and compassion. He will always be remembered for his selfless devotion to helping marginalized communities and for how he gently guided so many of us in the development sector.

Sitaram, we love you and miss you.

CONTENTS

A couple years ago, I attended a Wall Street conference in Manhattan. The event was hosted by Credit Suisse, and the topic was microfinancethe practice of lending very small amounts of money to very poor people so that they can engage in income-generating enterprises. There were about fifty business-people in attendance, a few whom I recognized. I picked up my registration badge and found a seat in the back row. I wanted to blend inanonymouslywhile I listened to the presenters and got a feel for current trends in the industry.

During the break, there was a scurry to the coffee table. I got in line as well. After the line of people filled their coffee cups, the participants stood chatting. I found myself talking with a twenty-something Credit Suisse investment banker who happened to be from India. He spoke with that precise British-Indian accent that is neither British nor Indian. His charcoal pin-striped suit had an elegantly folded white pocket square. His crisp white shirt and patterned blue tie somewhat mirrored my own attire, although I feel more at ease in a traditional kurta.

He said he had just joined Credit Suisses microfinance group, having spent a couple years in the investment banking group.

I wondered if he would like the changeand the unique challenge.

What do you do? he asked me.

I work in microfinance, too, I said. I just launched a start-up called Vaya.

I explained that I split my time between the United States and India. Vaya is headquartered in Hyderabad.

He asked about the operational model I was using. I described the peer-group lending that Vaya uses and the focus on income-generating loans.

That sounds like the SKS model, he said.

Yeah, thats right, I replied, smiling. Its like SKS.

SKS Microfinance is one of the worlds largest microfinance companies. It serves close to seven million members in India and has disbursed more than $12 billion in microloans. It was one of the first microfinance companies in the world to do an IPO. In fact, Credit Suisse was one of the investment banks that helped take SKS public. Today, hundreds of microfinance institutions around the world emulate SKS.

I knew the company well. After all, I founded it.

The Credit Suisse banker did not know that. I didnt tell him. He wished me all the best and headed back for a second cup of coffee.

I was pleased in a way. The institution I had createdand to which I had devoted a good portion of my lifehad transcended me.

As the banker walked away, my thoughts went back to one of the women who had been an early member of SKS. I met her twenty years ago, in 1998, soon after I founded SKS. Her name was Saailibai, and her world was very different from the mid-town Manhattan conference hall of Credit Suisse. Saailibai was a Banjara tribal woman in her early twenties who lived in a remote village called Kondapur in Telangana, the drought-prone region of southern India where my family is from and where I first started working in microfinance. The Banjaras are a tribal community and are among the poorest people in the country. Tribal people were historically marginalized and faced severe discrimination.